Matthew Bresnahan, Market Strategist
[Auto Transcription]
“Good afternoon Traders, this is Matthew Bresnahan with Blue Line Futures coming to you from the Chicago Board of Trade with this week’s grain market recap. Before we jump into today’s price action, we’re going to review some of the key figures and big surprises that we saw in today’s USDA report. Diving into the domestic numbers, the biggest surprise definitely came with the increase in corn yields, bumping all the way up to 177.1 bushels per acre, which is a record compared to expectations of just 174.72. 42 billion bushels, which was right at the top end of the range of estimates before the report. As a result, we did see corn ending stocks domestically notch higher.
Turning the page over to soybeans, those also saw an increase in yield estimates, but on a much more modest gap, I would say, by only jumping up 710th of a bushel per acre to 50.6 compared to the previous or the average estimate of 49.8. As a result, we did see a modest increase in soybean production to 4.65 billion bushels compared to the average estimate of 4.122 billion bushels. Likewise, we did see estimates or ending stocks estimates also tick higher. The only component of the grain complex domestically that was lower in terms of ending stocks was actually wheat. In many ways, wheat actually had some of the most positive news to write home about in the course of the day.
Now turning the page over to some of the global numbers, it is important to note that the global figures or the global ending stocks all came in above expectations. It is a result mostly of yields being notched higher, but a lot of it is also ending stocks. Global corn ending stocks were reported at 325.72 million metric tons. Before the report, the expectation particularly around corn and soybeans was what was going to happen with the Brazilian estimates. Brazilian corn production was cut by 2 million tons to 127 million metric tons, and their corn exports were lowered to 54 million metric tons from 55. Now on soybeans, the USDA was a little bit more aggressive in their corrections lower to Brazilian production. We did see them cut 4 million tons off of their estimates, cutting Brazilian production down to 157 million metric tons compared to 161 here. Now if you look at exports, that’s what’s interesting here because the USDA opted to leave Brazilian exports unchanged. If you look at soybean ending stocks, they were reported at 114.65 million metric tons.
Lastly, looking at wheat here, world production was a touch higher, and ending
stocks concurrently were also a little bit higher. But again, the wheat outlook does look the most constructive for grain bulls exiting here today. There were no major sweeping surprises as it came by way of wheat today.
Now jumping into the price action, unsurprisingly with some of the price action that we saw, we did see beans make a new low. But looking at the one-day chart, you could see the initial panic and reaction after the report kind of quelled around 12:00 here, and we did rally back a little bit. That isn’t insignificant because it does show that bulls were willing to come back to the market. For the day, we did settle down at 10 and 3/4 cents to ultimately settle at 447 even, and it will be interesting to see how prices play out into next week.
For corn, soybeans, which also had their own rough day, did trade markedly lower here. At one point, they traded all the way down to 1203 even, which was the low for the day. Looking back on it, it tested our significant retracement level between the midsummer low and highs here. But I do think that this personally is pretty constructive in that the market was able to find support intraday after a relatively or very bearish USDA report.
Lastly, looking over at wheat, this has kind of chopped around in this zone. It does look like we may have broken trend line support here a little bit, but we actually did settle pretty much right on the nose of trend line support there. The wheat markets do have a good amount going for them here, and as you can see, just as with corn and soybeans, we did see prices eventually come back here towards the end of the session.
Next week, if we do see continued weakness, it’s going to likely come by way of the early morning trade. But it will be interesting to see how the markets react and synthesize some of this data in the coming days and weeks. I would expect Brazilian weather and production estimates continuing to be a major market mover for both corn and soybeans over the next 6 to 8 weeks while they wrap up harvest. We will have to see what the market holds for us next week. Thank you for watching, give us a like and subscribe.”